NASA has announced the development of a commercial space transportation system that will cost an estimated 1.6 billion dollars. President Obama has requested $850 million in funds to support the project, which is a NASA's commercial crew development initiative.

The new transportation system – which some media outlets have termed a “space taxi” for astronauts – will include a public Integrated Design Contract (IDC) in which several companies are expected to design an architecturally innovative aircraft that includes the spacecraft, launch vehicles and services, ground operation while maintaining spaceflight safety.

President Obama’s request to financially support the program stems from NASA’s need to use Russian spacecraft to transport astronauts to the International Space Station. NASA retired several space shuttles earlier this year. If approved, the U.S will save an estimated $50 million per person it currently pays Russia in transportation expenses. Last week, the Senate Appropriations Committee offered $500 million for the initiative.

NASA commercial spaceflight development director Phil McAlister said, "Right now, we have a single-string failure for a $100 billion national lab. Every year we do not have a commercial crew capability, the station is at risk."

The NASA initiative is expected to begin Oct. 1 and will run from July 2012 to April 2014.

This is a significant step forward in America's amazing story of space exploration," administrator Charles Bolden said. "It's further evidence we are committed to fully implementing our plan – as laid out in the Authorization Act – to outsource our space station transportation so NASA can focus its energy and resources on deep space exploration."

NASA believes a commercial space transportation system is important in order to create future business ventures and guaranteed access to the International Space Station.